Credit Card Authentication
What Is Credit Card Authentication?
Credit card authentication is the most common way of affirming the legitimacy of a customer's credit card by checking with the company that issued the card. Authentication is generally the primary half of the transaction interaction while utilizing a credit card.
When the card is validated, the purchase is approved or denied, the money is put on the customer's credit card bill, and the payment is credited to the merchant's account.
Understanding Credit Card Authentication
Notwithstanding the customer, an electronic payment transaction includes four substances: the merchant, the merchant's bank, a network processor, and the issuer of the customer's card.
The merchant's bank is called the merchant procuring bank. Most banks are individuals from the major card networks, for example, Visa and MasterCard, which empowers them to act as merchant procuring banks on behalf of organizations that acknowledge credit card payments.
The merchant, utilizing a network processor, demands that the merchant's bank handle processing of the transaction. When the card issuer verifies the card and approves the purchase, the payment is recorded on the customer's credit card account and paid into the merchant's bank account.
The Role of the Merchant Acquiring Bank
All merchants who acknowledge credit or debit cards must work with a merchant getting bank. It is the middleman in this cycle, facilitating the transaction and afterward settling the funds for deposit into merchants' accounts.
What Happens When You Swipe
At the point when a card is swiped or placed into a website, the subtleties of the transaction are sent electronically to the merchant getting bank. The bank transmits the subtleties to the card issuer for authentication.
The card issuer checks every one of the subtleties including the card number and type, its security code, and the cardholder billing address. Issuers have different procedures in place to guarantee that a transaction isn't fraudulent.
Authorization Communication
Authorization communication is the next step in the credit card transaction process. The issuer sends the new authentication to the merchant securing bank. The bank gets the communication and approves the payment to the merchant.
The last authorization process likewise permits the merchant securing bank to start a deposit into the merchant's account. Consequently merchants depend on merchant procuring banks for both payment processing and account servicing. In a credit card transaction, the merchant getting bank is likewise the settlement bank, getting the payment funds and depositing them in the merchant account.
As any consumer knows, this genuinely intricate series of steps is completed shortly.
Merchant gaining banks regularly charge merchants transaction fees and month to month account fees. Merchant gaining banks likewise cover the risks of any issues emerging with non-settlement, chargebacks, and refunds, which are covered by the month to month account fees.
Features
- The merchant and the consumer are then told of the action.
- Each credit card transaction is verified and authorized (or declined) by the company that issued the card.
- The middleman in this cycle is the merchant's bank, which settles the approved payment into the merchant's account.
